Marshall Motor Holdings plc 2016 Full year results presentation - - PowerPoint PPT Presentation

Marshall Motor Holdings plc

2016 Full year results presentation

INTRODUCTION

2

AGENDA

• Highlights of a Transformational Year
• Financial Overview
• Operating and Strategic Highlights
• Outlook
• Summary

3

HIGHLIGHTS OF A TRANSFORMATIONAL YEAR

• Record financial results at both revenue and PBT
• Revenues up 54.1% (LFL +10.7%), underlying PBT* £25.4 m (+60.4%)
• Final dividend 3.7p per share, full year 5.5p (+84.6%)
• Adjusted net debt £54.5m**, 1.2x pro-forma EBITDA***
• Net assets of £145.7m - £1.88 per share

FINANCIAL SUMMARY

• Excellent LFL revenue growth - New +13.1%, Used +8.3%
• Strong LFL growth in Aftersales revenue +5.7% and margins
• Leasing: continued strong profitability

OPERATIONAL OVERVIEW

• Completed £106.9m strategic acquisition of Ridgeway
• SG Smith integration complete
• A number of freehold site developments completed, freehold now £106.5m
• Disposal of 3 non-core franchises

STRATEGIC DEVELOPMENTS

• Board remains cautious post Brexit
• March order bank building as anticipated
• Q1 trading in line with expectations
• Full Year outlook remains unchanged

FULL YEAR OUTLOOK

4

* Underlying profit before tax is presented excluding non-underlying items ** Excludes £64.5m asset backed finance relating to leasing segment ***includes 12 month pro-forma results of businesses acquired during the Year

FINANCIAL OVERVIEW

5

FIVE YEAR TRACK RECORD OF STRONG GROWTH

Class Leading Returns

250 500 750 1,000 1,250 1,500 1,750 2,000 2012 2013 2014 2015 2016

REVENUE (£m)

794.4 1,085.9 1,232.8 1,899.4

5 10 15 20 25 30 2012 2013 2014 2015 2016

UNDERLYING PBT (£m)

4.6 10.2 13.1 15.8 25.4

25 50 75 100 125 150 2012 2013 2014 2015 2016

NET ASSETS (£m)

56.0 60.7 66.2 145.7 129.9

CAGR 24.3% CAGR 53.7%

940.5

6

FINANCIAL SUMMARY

FY 2016 FY 2015 Var Revenue (£m) 1,899.4 1,232.8 54.1% Gross Profit % 11.6% 11.8% (18bps) Underlying Operating Profit (£m) 32.3 18.7 72.5% (%) 1.7% 1.5% 18bps Finance Costs (£m) (6.9) (2.9) (139.4.%) Underlying PBT* (£m) 25.4 15.8 60.4% Exceptional items (£m) (3.2) (0.5) Reported PBT (£m) 22.2 15.4 Underlying Effective Tax Rate % 20.3% 23.0% Underlying Basic EPS** 26.2p 15.8p Dividend Per Share 5.50p 2.98p Reported Net (Debt)/ cash (£m) (119.0) (27.2) Adjusted Net (Debt)/ cash (£m) *** (54.5) 24.1

Class Leading Returns

*Underlying profit before tax is presented excluding non-underlying items **2015 calculated using 2016 weighted average number of shares in issue *** Excludes £64.5m asset backed finance relating to leasing segment

7

SEGMENTAL RESULTS

Segmental Revenue (£m) FY 2016 FY 2015 Var Retail 1,859.7 1,195.5 55.6% Leasing 39.3 37.0 6.3% Unallocated 0.3 0.2 38.1% Total 1,899.4 1,232.8 54.1% Underlying Segmental PBT (£m) FY 2016 FY 2015 Var Retail 28.9 18.8 54.0% Leasing 4.9 4.9 0.6% Unallocated (8.4) (7.8) (7.8%) Total 25.4 15.8 60.4%

Class Leading Returns

8

RETAIL: REVENUE AND VOLUMES

Revenue (£m) FY 2016 FY 2015 Var % LFL Var % New 983.3 637.8 54.2% 13.1% Used 718.3 459.2 56.4% 8.3% Aftersales 202.6 127.8 58.4% 5.7% Internal (44.5) (29.3) Total 1,859.7 1,195.5 55.6% 10.8% Unit Sales FY 2016 FY 2015 Var % LFL Var % New 48,884 35,103 39.3% 5.5% Used 37,787 27,699 36.4% 0.4% Total 86,671 62,802 38.0% 3.3%

Class Leading Returns

9

RETAIL: GROSS PROFIT

Class Leading Returns

45.7 68.9 2 4 6 8 10 12 14 16 10 20 30 40 50 60 70 80 90 100 FY 2015 FY 2016

NEW

Mix % FY 2015 FY 2016 Revenue 52.1% 51.6% Gross Profit 33.6% 32.5% Mix % FY 2015 FY 2016 Revenue 37.5% 37.7% Gross Profit 24.5% 23.9% Mix % FY 2015 FY 2016 Revenue 10.4% 10.7% Gross Profit 41.9% 43.6%

33.3 50.7 2 4 6 8 10 12 14 16 10 20 30 40 50 60 70 80 90 100 FY 2015 FY 2016

USED

56.9 92.3 40 42 44 46 48 50 52 10 20 30 40 50 60 70 80 90 100 FY 2015 FY 2016

AFTERSALES / OTHER

Gross Profit (£m) Gross Profit %

10 % % % £m £m £m

LEASING SUMMARY

Class Leading Returns

5,000 5,200 5,400 5,600 5,800 6,000 6,200 6,400 2012 2013 2014 2015 2016

FLEET (NO. VEHICLES)

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 2012 2013 2014 2015 2016

LEASING EQUITY (£M)

Funded Equity 500 1,000 1,500 2,000 2,500 2012 2013 2014 2015 2016

DISPOSAL PROFIT PER UNIT (£)

11

6,192 6,029 6,031 5,610 5,212 1,791 2,330 2,250 2,010 1,867 64.5 51.4 47.0 45.6 42.1 5.1 11.1 11.3 9.9 11.3

BALANCE SHEET

(£m) FY 2016 FY 2015 Intangible 122.0 40.8 Property, Plant & Equipment 201.8 107.3 Other 2.6 2.0 Fixed Assets 326.5 150.1 Inventory 380.0 240.6 Trade / Other Receivables 95.1 42.7 Cash & Equivalents 0.1 24.1 Current Assets 475.2 307.5 Trade / Other Payables (504.8) (268.6) Leasing Debt (64.5) (51.4) Bank / Other Debt (54.6)

• Other Liabilities

(32.0) (7.7) Total Liabilities (656.0) (327.6) Shareholders’ Equity 145.7 129.9 Reported Net Debt (£m) (119.0) (27.2) Adjusted Net Debt (£m) (54.5) 24.1 Trade / Other Receivables FY 2016 FY 2015 Trade receivables 71.0 28.9 Other receivables 13.6 9.0 Amounts due from related undertakings

• 0.3

Prepayments 10.4 4.5 Total 95.1 42.7

Class Leading Returns

12

Trade / Other Payables FY 2016 FY 2015 Vehicle and other funding 364.7 186.2 Other Payables 140.1 82.4 Total 504.8 268.6

* Excludes £64.5m asset backed finance relating to leasing segment **includes pro-forma results of businesses acquired during the Year

Working Capital FY 2016 Inventory (14.8) Trade and other receivables (0.3) Trade and other payables (inc stock funding) 56.3 Other (2.9) Total 38.3

CASHFLOW

(£m) FY 2016 FY 2015

EBIT 29.1 18.2 Depreciation: Retail 5.8 3.8 Depreciation: Leasing 17.3 17.2 Amortisation 1.1

• Share based payments

1.3 0.6 Other movements (1.0) (0.1) Adjusted EBIT 53.6 39.8 Working Capital 38.3 (7.6) Operating Cashflow 91.9 32.2 Tax / interest (11.6) (6.7) Gross Cashflow 80.3 25.5 Capital Expenditure: Retail (26.4) (9.8) Capital Expenditure: Leasing (35.5) (29.8) Sale of business / disposal proceeds 14.6 8.6 Free Cashflow 33.0 (5.5) Acquisitions (net of cash acquired) (94.5) (21.5) Dividends (3.3) (15.4) Net Borrowings 40.8 (2.2) Investments

• 30.0

Net IPO Proceeds

• 36.9

Cashflow (24.0) 22.3

13

Class Leading Returns

NON UNDERLYING ITEMS

14

Class Leading Returns

(£m) FY 2016 FY 2015

Acquisition costs 2.2 0.5 Profit on disposal of business assets (0.3)

• Amortisation of acquired order book

0.8

• Gain on interest swap termination

(0.3)

• Restructuring costs

1.6

• Investment property fair value

(0.7)

• Total Non Underlying items

3.2 0.5

FINANCIAL GUIDANCE: 2017

• PBT – Slight H1 weighting
• Central cost - investment continues £9.0m - £9.5m
• Further exceptional cash integration costs for Ridgeway
• Retail capex 2017 c.£26m
• £75m investment over 2016-2018
• Interest to reflect full year of Ridgeway ownership c.£9.0m
• Ridgeway film tax planning scheme settled £4.2m
• Full year effective tax rate c22-23%

15

Class Leading Returns

OPERATING & STRATEGIC REVIEW

16

MARKET BACKDROP

• 2.69m new units registered in 2016, up 2.3%
• FY Fleet / business up 4.3%, retail down 0.2%
• Market post Brexit cooled
• H2 Growth +1.2% vs H1 +3.2%
• 2017 SMMT forecast -5.0%
• Feb YTD +1.8%
• Expect some “pull forward” into Q1 due to VED
• Used car market c.7.6m
• Market dynamics:
• UK 2nd largest market in Europe
• 84% of new car finance cases PCP, used 55%*
• Over 58,000 live PCPs*
• Increased vehicle parc and retention strategy through

service plans positive for aftersales growth

• Over 72,000 live service plans
• Franchised sector winning share from independents

Source: SMMT, Experian and Internal Management Information *Marshall Group statistics

1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0

2009 2010 2011 2012 2013 2014 2015 2016

UK USED CAR REGISTRATIONS (m)

17 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

2009 2010 2011 2012 2013 2014 2015 2016 2017F

UK NEW CAR REGISTRATIONS (m)

CUSTOMER SALES AND AFTERSALES RETENTION STRATEGY THROUGH PCP

18 RESIDUAL VALUE OWNERSHIP CYCLE AFTERSALES OPPORTUNITY

• 84% of financed cases PCP
• Service plan retention
• High renewal rates
• 55% of financed cases PCP
• Retention of customers who

historically went to independents

• Good renewal rate
• pportunity
• “3rd bite of cherry” due to

control of customer

• Anticipated HP agreement
• Retention through warranty
• RV exposure mitigated

SEGMENT 1 (0-3 YEARS) SEGMENT 2 (3-6 YEARS) SEGMENT 3 (6-9 YEARS) 100% 50% 0%

Customer 1 Customer 2 Customer 3

84% 55%

AGE

TO BE THE UK’S PREMIER AUTOMOTIVE RETAIL AND LEASING GROUP

VISION

Class Leading Returns Customer First Retailing Excellence People Centric Strategic Growth

19

Customer First

CONTINUED HIGH LEVELS OF CUSTOMER ADVOCACY

7,231

respondents in 2016

41,928

customers surveyed

96%

showroom satisfaction

43.4%

customers returning

• r recommended

Source: Internal Management Information

20 32 34 36 38 40 42 44 46

Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Returning/ recommended customers (Rolling 12 months)

RETAILING EXCELLENCE ONLINE

21

Retailing Excellence

• Q1 launched new fully responsive website
• Q3 acquired www.marshall.co.uk
• Acquisitions fully integrated
• Enlarged stock pool of c.7,000 vehicles
• Enjoying c450,000 visitors per month

www.marshall.co.uk Sector Leading Social Media

• Most influential dealer group on Twitter*
• Best use of social media winner**
• Best digital initiative**

Source: Internal Management Information *Car dealer magazine ** Automotive Management Awards 2017

RETAILING EXCELLENCE THROUGH TECHNOLOGY

22

Retailing Excellence

• 2 year rollout for all sites completed Q4’16
• Acquisitions fully integrated
• Seamless customer journey
• Robust data capture and enquiry management
• Over 800 iPads deployed across group
• Increased sales executive productivity
• Rolled out 2nd iteration of Phoenix
• Acquisitions fully integrated
• Visible across all sites
• Significantly enhanced stock pool
• A number of new features including stock

profiling and user alerts

Phoenix 2 Bespoke Enquiry Management System

PEOPLE CENTRIC

81%

Trust Index

83%

Participation rate

People Centric

*Great Place to Work Survey

7 Years

GPTW recognition

19th

Best Employer in the UK*

• Introduced industry leading initiatives May 2016
• c70% starters new to industry
• 2 week residential induction course prior to

joining

• £25k guaranteed earnings in first year
• Retention bonuses in years 1-3
• Significant reduction in sales executive turnover

23

PORTFOLIO DEVELOPMENT

ACQUISITIONS / STARTUPS EXITS CORPORATE

2009 2010 2011 2012 2013 2014 2015 2016

1ST

GERMAN BRAND ADDED MERCEDES

• BENZ

2ND

GERMAN BRAND ADDED VOLKSWAGEN

3RD

GERMAN BRAND ADDED AUDI

4TH

GERMAN BRAND ADDED BMW MMH LISTS ON THE LSE

EXIT OF 30 NON-CORE, SUBSCALE OR LOSS MAKING OPERATIONS

S G Smith 2 TRANSACTIONS 2 TRANSACTIONS 2 TRANSACTIONS & 1 START-UP * 2 TRANSACTIONS 2 TRANSACTIONS & 4 START-UPS * * * RIDGEWAY 3 TRANSACTIONS & 1 START-UP

Strategic Growth

24

PORTFOLIO TODAY

• 103 Locations across 25 counties
• 18 “other” standalone operating units
• 83.5% brand coverage
• Headroom for further growth

Strategic Growth

1.9% Specialist 50.5% Prestige 21.4% Alt Premium 26.2% Volume 25

STRATEGIC GROWTH – RIDGEWAY INTEGRATION

• Management restructure implemented
• Sites rebranded to Marshall
• Integrated systems
• Email - @marshall.co.uk
• Phoenix 2 – full visibility across all sites
• Full budget and reporting in-line with wider

group

• Marshall policies & procedures rolled
• ut successfully
• Synergies
• Supply-side deals
• Savings through operational efficiencies
• Enlarged stock pool and stock sharing

Strategic Growth

26

STRATEGIC GROWTH – COMPLETED DEVELOPMENTS

Strategic Growth

27

• 3 major Jaguar Land Rover developments

completed

• South Oxford – Freehold
• Cambridge- Long leasehold
• Ipswich – Freehold
• Continued investment in existing dealerships
• Mercedes-Benz car and CV aftersales refurbishment
• Mercedes-Benz Chichester showroom refurbishment
• Bexley Audi showroom extension and refurbishment
• Melton Land Rover site expansion
• Bedford Land Rover new PDI facility
• Grimsby BMW / Mini and Volkswagen bodyshop expansion

Jaguar Land Rover South Oxford - Freehold Jaguar Land Rover Ipswich - Freehold Jaguar Land Rover Cambridge - Long Leasehold

STRATEGIC GROWTH – ONGOING DEVELOPMENTS

Strategic Growth

28

• 2 major developments in progress
• Newbury Jaguar Land Rover (open point)
• Relocation of Exeter Audi
• Ongoing investment across a number
• f the Group’s brand partners

CURRENT TRADING AND OUTLOOK

• Given economic uncertainty post Brexit, Board remains cautious
• Whilst early, March new car order bank building as anticipated
• Q1 trading in line with expectations
• Full year outlook unchanged

29

SUMMARY

• Transformational year with record results at revenue and PBT level
• Full year dividend 5.5p up 84.6%
• Integration of SG Smith complete
• Ridgeway integration making good progress
• Group is well positioned as a result of recent strategic acquisitions
• Headroom with all brand partners for further growth

30

Marshall Motor Holdings plc

Report & Accounts Full Year ended 31st December 2016

INVESTMENT HIGHLIGHTS

83.5%

brand coverage- 2nd highest in UK

66.1%

Underlying EPS growth*

£106.5m

freehold and long leasehold assets

Bespoke

Phoenix 2 reporting system

Balanced

brand portfolio

7th

largest UK dealer group with £1.9bn revenue

Excellent

financial track record

Diverse

geographic footprint

19th

best employer in UK

A1

*comparative calculated utilising 2016 weighted average number of shares in issue

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 2012 2013 2014 2015 2016

Underlying EBITDA ROS %

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2012 2013 2014 2015 2016

Operating Costs %

APPENDIX: 5 YEAR TRACK RECORD

0.0% 0.3% 0.6% 0.9% 1.2% 1.5% 1.8% 2012 2013 2014 2015 2016

Underlying EBIT ROS %

0.0% 2.5% 5.0% 7.5% 10.0% 12.5% 15.0% 2012 2013 2014 2015 2016

Gross Margin %

A2

2.4 2.4 2.0 2.4 2.6 1.4 1.3 0.9 1.5 1.7 11.6 12.1 11.7 11.8 11.6 10.2 10.8 10.9 10.3 10.1

APPENDIX: 5 YEAR TRACK RECORD (cont)

Gross Profit % Gross Profit (£m)

25.9 32.9 39.3 45.7 68.9 6.2% 6.4% 6.6% 6.8% 7.0% 7.2% 7.4% 7.6% 7.8% 8.0% 20 30 40 50 60 70 2012 2013 2014 2015 2016

NEW

17.5 24.1 27.7 33.3 50.7 6.4% 6.6% 6.8% 7.0% 7.2% 7.4% 7.6% 7.8% 8.0% 5 15 25 35 45 55 2012 2013 2014 2015 2016

USED

42.0 48.7 50.5 56.9 92.3 37% 38% 39% 40% 41% 42% 43% 44% 45% 46% 30 40 50 60 70 80 90 2012 2013 2014 2015 2016

AFTER SALES

6.8 7.6 7.9 9.0 8.4 0% 5% 10% 15% 20% 25% 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 2012 2013 2014 2015 2016

LEASING

£ £ A3

5K 10K 15K 20K 25K 30K 35K 40K 45K 50K 2008 2009 2010 2011 2012 2013 2014 2015 2016 NEW VEHICLES 0K 3K 6K 9K 12K 15K 18K 21K 24K 27K 30K 33K 36K 39K 42K 2008 2009 2010 2011 2012 2013 2014 2015 2016 USED VEHICLES

APPENDIX: MMH VOLUMES

CAGR 19.0% CAGR 15.2%

Source: xxxx

A4

25 20 16 13 12 49 35 32 27 19 17 17 14 13 38 26 23 28

APPENDIX: MARKET BACKDROP

Source: SMMT

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 07 08 09 10 11 12 13 14 15 16 17F

NEW CAR MARKET (MILLION VEHICLES)

0.0 0.6 1.2 1.8 2.4 3.0 3.6 4.2 4.8 5.4 6.0 6.6 7.2 7.8 8.4 9.0 07 08 09 10 11 12 13 14 15 16

USED CAR MARKET (MILLION VEHICLES)

A5

1.9 2.0 1.9 2.1 2.4 2.7 2.6 2.5 2.3 2.0 6.0 6.0 6.0 7.0 7.0 7.6 7.1 7.0 6.0 6.0 2.6

DISCLAIMER

• This document comprises the written materials/slides for a presentation concerning Marshall Motor Holdings plc (the “Company”)

and its results for the period ended 31 December 2016 (the “2016 Results”).

• By reviewing this presentation you agree to be bound by the conditions set out below.
• No reliance may be placed for any purposes whatsoever on the information in this document or on its completeness. The

presentation is intended to provide a general overview of the Company’s business and does not purport to deal with all aspects and details regarding the Company. Accordingly, neither the Company nor any of its respective directors, officers, employees or advisers nor any other person makes any representation or warranty, express or implied, as to, and accordingly no reliance may be placed

• n, the fairness, accuracy or completeness of the information contained in the presentation or of the views given or implied. Neither

the Company nor any of its respective directors, officers, employees or advisers nor any other person shall have any liability whatsoever for any errors or omissions or any loss howsoever arising, directly or indirectly, from any use of this information or its contents or otherwise arising in connection therewith.

• Certain statements in this presentation regarding the Company are or may be forward-looking statements. These forward-looking

statements are neither historical facts or guarantees of future performance. Such statements are based on current expectations and belief and, by their nature, are subject to a number of known and unknown risks and uncertainties which may cause the actual results, prospects and developments of the Company to differ materially from those expressed or implied by these forward-looking statements.

• The information contained in this presentation is for background purposes only. The subject matter of the presentation may be

subject to change and the Company does not take any responsibility for updating or amending the contents to reflect such changes. The material contained in this presentation reflects current legislation and the business and financial affairs of the Company which are subject to change without notice and audit, and is subject to the provisions contained within legislation.

• This presentation summarises information contained in the Final Results. Without prejudice to the generality of these conditions, this

summary information, including any views given or implied, or any statement made, in relation to such information should not be relied upon, nor should it be treated as accurate or complete. This presentation and all such information contained herein should be read subject to the Final Results.

• The information contained in this presentation has been obtained from Company sources and from sources which the Company

believes to be reliable but it has not independently verified such information and does not guarantee that it is accurate or complete.

• No statement in this presentation is intended to be a profit forecast and no statement in this presentation should be interpreted to

mean that earnings per Company share for current or future financial years would necessarily match or exceed the historical published earnings per Company share.

A6

Marshall Motor Holdings plc

Report & Accounts Full Year ended 31st December 2016